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By Mike Kapsch

AT&T (NYSE: T) created a stir on Wall Street last month when its nine-month pursuit to acquire Deutsche Telekom AG’s (OTCQX:DTEGY) T-Mobile for $39 billion epically failed.

The deal could have catapulted AT&T to the top spot of the telecommunications industry… knocking out current champ – Verizon (NYSE: VZ).

But instead, the botched trade only left AT&T on the hook to hand $1 billion of its own broadband spectrum over to Deutsche Telekom and an additional $3 billion for backing out of the deal. (Note: Opposition from the FCC and the Justice Department were the main reasons the deal was cut short.)

And that’s very unfortunate, because boosting AT&T’s spectrum was the only reason it wanted to buy T-Mobile in the first place.

Now The Wall Street Journal reports, “AT&T has said it faces a potentially crippling shortage of airwaves, or spectrum, as customers clog the network with video and music downloads to their iPhones and tablet computers. Yet, without the T-Mobile deal it has few remaining options to help bolster its capacity.”

So how can AT&T quickly recoup its spectrum losses and get back on track? The solution may lie in Dish Network (Nasdaq: DISH).

The Dish on Dish Network

With a $12 billion market cap and a solid price-to-earnings ratio of just 8, Dish Network has recently become a potential takeover/merger target for the telecom industry. For the past few years, it has stockpiled $3 billion worth of wireless spectrum in the hopes it will soon begin expanding its business in the telecom space.

Yet with so many major players in the industry already, it's unlikely Dish can become telecom’s next big thing on its own. In fact, Dish even knows this. That’s why it’s hoping to partner up with a telecom provider to get its foot in the door as an alternative.

AT&T looks like a perfect fit. But there’s one problem. During AT&T’s T-Mobile fiasco, Dish was one of AT&T’s main critics.

And even though Dish and AT&T would certainly benefit each other by joining forces, they currently see each other more as direct competitors than partners. A chance for big profits may soon change that though.

The Telecom Industry’s Spectrum Scramble

All five of the major telecom players – Verizon, AT&T, Sprint (NYSE: S), MetroPCS (NYSE: PCS), and T-Mobile – admit they’ll need more spectrum within the next three years. Currently, Verizon is estimated to have as much as 56 percent more spectrum than its closest competitor AT&T.

But Dish Network could change all of that. Forbes reports, “AT&T could quickly gain a sizeable lead over Verizon by buying Dish Networks or Dish’s spectrum.”

Plus, as an added bonus, AT&T likely wouldn’t have to worry about all the regulatory issues it ran into trying to buy T-Mobile.

According to Tim Farrar, an analyst at TMF Associates, “Dish doesn’t have an operating wireless network so there are none of the same concerns about competition [as the T-Mobile deal].”

Will AT&T and Dish squash their egos and join forces for the better part of their businesses?

Only time will tell. But investors will certainly want to keep a close eye on this potential takeover/merger in 2012.

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Source: AT&T And Dish Network: M&A Match Made In Heaven?